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Ken Olsen Was Born in Bridgeport, Connecticut, in 1926 and Grew up in the Neighboring Town of Stratford

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Ken Olsen Was Born in Bridgeport, Connecticut, in 1926 and Grew up in the Neighboring Town of Stratford KenOlsen Kenneth Harry Olsen’s early experiences, both as a child and as a young man in the U.S. Navy, put him on the road to becoming a topnotch engineer and entrepreneur. His early life centered on machines and elec- tronics, laying the foundations for his future work with computers. A Love of Machines and Electronics Ken Olsen was born in Bridgeport, Connecticut, in 1926 and grew up in the neighboring town of Stratford. His father came from Norway, and his mother, from Sweden. His father was a designer of machine tools and imbued Ken and his two brothers with his interest in machines. Much of the boys’ spare time was spent in the family’s basement tinkering with tools and repairing neighbors’ radios.1 All three boys became engineers. Olsen was drafted in World War II and was sent to the Navy’s electron- ics school, where he learned to maintain the radar, sonar, navigation, and other electronic equipment found on ships. In a 1988 interview for the Smithsonian Institution, Olsen expressed the view that the Navy’s educa- tion programs did much to stimulate the growth of the U.S. electronics 2 industry. Many of the technicians trained by the Navy subsequently went Ken Olsen, circa 1965. to college and pursued careers in electronics. Olsen himself went to the (Photo courtesy of Ken H.Olsen) Massachusetts Institute of Technology (MIT) in 1947, where he studied electrical engineering, receiving his B.S. and M.S. MIT and Lincoln Laboratory At MIT, Olsen joined a group of engineers working under Jay Forrester on the Whirlwind computer. The Whirlwind was originally conceived by the Navy as an aircraft flight simulator, but the project had evolved into a more ambitious effort to develop a general-purpose computer that could provide real-time information. After the Soviet Union detonated an atomic bomb in 1949 and with Cold War tensions increasing, MIT persuaded the U.S. Air Force that Whirlwind computers could provide the brains for an air defense system. MIT established Lincoln Laboratory to do the necessary research. Ken Olsen worked on core memory, which was based on magnetized ceramic material and was much more reliable than vacuum tubes. He led a team that built a small computer to test the new approach to memory before it was incorporated in Whirlwind. Later, Olsen was chosen to be the liaison between Lincoln Lab and IBM, which had been selected to build the com- puters for the Semi-Automatic Ground Environment (SAGE) defense sys- Ken Olsen1 www.economicadventure.org tem. In this capacity, Olsen was exposed to two contrasting management models—the free- wheeling environment of Lincoln Lab and the more bureaucratic style of IBM. Later, in his own company, Olsen would try to follow the Lincoln Lab approach.3 Olsen next worked on developing the TX-0 Massachusetts Institute of Technology computers. (Photo courtesy of the Boston Public Library, computer, which was the first general-purpose Print Department) computer to use transistors rather than vacuum tubes.4 The TX-0 was inter- active, and the immediate feedback generated much excitement among users. However, Olsen was frustrated. In his Smithsonian interview, he said that research alone was not satisfying. He wanted people to care and to put his ideas into action.5 Establishing DEC In 1957, Ken Olsen and an MIT colleague, Harlan Anderson, decided to start their own firm. They believed strongly that “electronics was going to revolutionize industry.”6 They approached the American Research and Development (ARD) Corporation, an early venture capital firm, to fund their business. They received $70,000 in equity and the promise of a loan of $30,000 in exchange for a 70-percent interest in the company. General Georges Doriot, the head of ARD and a highly regarded pro- fessor at the Harvard Business School, was intrigued by Olsen and Anderson’s idea that they could build computers more cheaply than IBM.7 However, in preparing their business plan for ARD’s board, Olsen and Anderson were counseled to downplay the concept of “computer.“ It was a new industry, dominated by large, established firms, and some of these were losing money in their computer operations. So, Digital Computer Corporation became Digital Equipment Corporation (DEC). Olsen and Anderson started their company in the small town of Maynard, Massachusetts, in a woolen mill built in 1845. Ken Olsen’s broth- er Stanley became the first employee. The first products were computer modules that were sold to universities and other research organizations that wanted to experiment with computer technology. After a year, they had made a small profit. PDP-1 and PDP-8 DEC’s first complete computer was the PDP-1. PDP stands for Programmed Data Processor. The name was chosen to get around restric- tions on U.S. government organizations’ acquiring more computers until existing computers were more fully used.8 The PDP-1 was simple and fast Ken Olsen2 www.economicadventure.org and, compared with other computers of the time, relatively inexpensive at $120,000. It was interactive, so the operator could receive immediate feed- back. Mistakes in inputting information could be detected at once. Scientists could analyze experimental results and know right away whether the experiment had been done correctly. Customers for the PDP-1 were engineers and scientists, who would develop their own software. DEC had originally contracted with some MIT professors to supply software, but they did not deliver; so DEC marketed the PDP-1 as a machine for users who could write their own programs.9 The first PDP-1s were sold one at a time to separate customers, but in 1962 10 International Telephone and Telegraph made a large purchase of 15. DEC’s big success came DEC’s big success came with the introduction of the PDP-8 in 1965. with the introduction of Regarded as the “first commercially successful minicomputer,”11 the PDP- the PDP-8 in 1965. The 8 was priced aggressively at $18,000. This low price greatly expanded the PDP-8 was popular for market. The PDP-8 was popular for scientific and industrial uses. Often, it scientific and industrial was sold to companies that incorporated the PDP-8 into larger systems, uses. Often, it was sold to including components from other vendors and customized software. These companies, called original equipment manufacturers (OEMs), then sold the companies that incorporat- packages to final customers. Educational institutions were important cus- ed it into larger systems, tomers, particularly after the price was reduced even more; the relatively including components simple PDP-8 was very useful in teaching how computers work. from other vendors and customized software. In designing the PDP-8, considerable attention was paid to its physical appearance. Olsen took a personal interest and drew upon ideas found in household appliances to make the PDP-8 colorful and attractive.12 The term “minicomputer” originated with correspondence from DEC’s representa- tive in England during the 1960s; he drew a link between the small comput- er and mini skirts and his Mini Minor car.13 The PDP-8 was followed by the very successful PDP-11 and later the VAX series of computers. During the 1970s, key customers were the OEMs, telephone and utility customers, medical users, universities and govern- ment, and manufacturers who used the computers for controlling and mon- itoring processes. With its greatly expandable memory system, the VAX was popular for design work, and software written for one model would also work on others. Rapid Growth and Competitive Pressures DEC grew rapidly in the 1970s, as demand for computers soared. Worldwide employment increased from 7,800 in 1972 to 67,000 in 1982.14 Despite failing to develop a strong contender in the market for personal computers, DEC continued to prosper through most of the 1980s. DEC began to move into the commercial business market, long dominated by 3 Ken Olsen www.economicadventure.org IBM. Powerful VAX super-minicomput- ers could perform tasks once the realm of mainframes. DEC was a pioneer in networking, and linking VAX units together magnified their already formi- dable capabilities. By the late 1980s, DEC employed more than 100,000 peo- ARD Annual Meeting Dinner, March 1971. Seated, left to right: Herbert H. Lank, CED Director; ple worldwide. Ken H. Olsen, DEC; Robert M. Beckett, Adage. Standing, left to right: E. Hervey Evans, McNair; G. William Miller, Textron; George F. Doriot; Nicholas DeWolfe, Teradyne; Claude Janssen, EED Director; Dr. Maurice Ponte, ANVAR. (Photo courtesy of Ken H. Olsen) Despite these successes, DEC began to come under intensifying competitive pressure. Minicomputers began to be challenged by workstations, powerful versions of the personal comput- er configured and equipped for business uses. Additionally, the industry was moving more and more to common software, whereas one of DEC’s strengths had been the compatibility of all of its machines using its own proprietary software. DEC was not alone in its struggles; all the major mini- computer companies were losing ground. DEC experienced losses in the early 1990s and found itself having to make large layoffs. Layoffs were anathema to Ken Olsen, who had taken pride in treating DEC’s employees well. In 1992, he left the firm. He became involved with a small computer company that provided assistance to com- panies with their older “legacy” computer applications. DEC was unable to regain its momentum and in 1998 was acquired by Compaq Computer, a manufacturer of personal computers. In 2002, Compaq merged into Hewlett Packard. Management Approach Under Olsen’s leadership, the links between academia and DEC were strong. Although a few senior people did not have college degrees, most employees were engineering graduates, and many had advanced degrees.
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